The dollar rose sharply overnight in New York following the IMF's report on the world economy, which predicted that Japan's economy would shrink more this year than previously expected.

In other major currencies, the euro was traded at 127.64, up from 126.30 yen late Wednesday in Tokyo.

European markets

Europe's major bourses were mixed Wednesday with France and Germany closing higher, but the FTSE fell into the red. The U.K. market slipped on further signs that the country's economy is strengthening, reducing the chances of another interest rate cut.

In Germany,the DAX got a shot in the arm from SAP AG
SAP, +2.04%
the world's biggest business management software maker. SAP said its first-quarter net income was unchanged from 1998's $91 million. SAP had warned last month that its first-quarter profits would be down because of a short fall in sales. See related story.

In early action, traders said SAP was the only factor pushing the DAX up. "SAP is the only real action. It's up 13.5 percent which is adding 30 points to the DAX,"said one trader at Salomon Smith Barney in Frankfurt.

However, once the Dow opened and moved skyward, Europe's bourses got another boost. Even the FTSE pushed into the black briefly.

Telecom Italia SpA
TI, -5.46%
formally accepted a proposal to merge with Deutsche Telekom AG
dt
on Wednesday in a deal worth approximately $95 billion. The combined company would create the world's second-largest telecommunications company. See full story.

Hopes of further U.K. rate cuts dim

In the United Kingdom, the market opened slightly higher but then slipped after the release of average wage earnings for the three months to the end of February. The expectation was for earnings growth of roughly 4 percent, but the statistics showed an adjusted rise of 4.6 percent year-on-year.

The U.K. jobless claimant numbers for March were also released. Economists said a smaller rise than expected is also reducing hopes of another rate cut. The figures showed a rise in unemployed of 2,000, lifting the overall rate to 1.314 million -- or 4.6 percent of the workforce. "Unemployment was expected to rise by 5,000 to10,000," said Wattret.

Meanwhile, the Bank of England (BoE) released the minutes from its last monetary policy committee meeting on March 8. They showed that all nine members voted for the 25 basis-point base-rate cut, which brought it down to 5.25 percent.

"If anything this should be relief because the market had speculated that there had been division between the member's of the monetary policy committee at the meeting," said Paribas' Wattret. Following the meeting, the BoE didn't release any comments on its decision which led to speculation there had been division. See London Calling.

German market turns its back on Kosovo

In Germany,investors appeared unconcerned about the ongoing crisis in the Balkans. Despite growing numbers of refugees flooding into neighboring countries, and rumors of NATO ground troops entering the fray, Germany's bourse seems little concerned.

"It's not having any impact at all [but] people should be paying more attention to it than they are [because] there's a risk to equities through war in Europe. But people don't want to think about it," said a Frankfurt-based trader at Salomon Smith Barney.

Currencies: Euro hits a new low -- again

In the currency markets, the dollar rose 0.7 percent to 119.74 yen and gained 0.1 percent at 1.8425 German marks. The euro was down 0.2 percent at $1.060, after a slight rebound from yet another all-time low of $1.0578. Wednesday's low beat one of $1.0594 set only two days earlier. Sterling was flat at $1.6087. See Major Currencies.

In the United States, the Dow Jones Industrial Average
DJIA, +1.38%
advanced 132.87 points, or 1.3 percent, to close at a record 10,581.42 Wednesday amid a slew of positive earnings reports. See Earnings Surprises. The Nasdaq Composite
$compq
surged 79.55 points, or 3.3 percent, to 2,489.19. The index lost 11.4 percent from its April 13 high through Tuesday's low. The S&P 500 Index
SPX, +1.32%
gained 29.95 points, or 2.3 percent, to 1,336.12. See Market Snapshot.

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